Materials Management's Five Critical Processes and People

When you discuss materials management, what you are talking about is the
portion of supply chain management that starts once the demand forecast
is complete. Materials management encompasses procurement,
transportation, and inventory management of the actual products from
manufacturer to storefront.

One of the decisions that companies have to make up front is whether
purchasing is considered part of their materials management team
function or if it is handled separately by a procurement team.

However
the supply chain management is organized, it is critical that there is
outstanding communication flow between purchasing and the team handling
inbound and internal logistics.

Choosing the right
strategy and tactics for this portion of supply chain management depends
largely on your resources and your industry. In a classic manufacturing
environment, with fairly predictable needs established, ERP or
Enterprise Resource Planning (ERP) and the ERP software that supports it
continues to play a role.

What has changed is since
the development of the Just In Time (JIT) method of materials
management has grown to be viewed as the gold standard of materials
management.

By developing supply chain partners that
are ISO 9001 compliant, or show similar reliability whether they are
formally certified or not, companies ranging from retail to
manufacturing successfully reduce inventory levels, leaving capital free
to invest in R&D, marketing, or capital improvements.

Building
the right team can make or break your supply chain. The best materials
manager has the breadth and depth of knowledge to execute:

In
order to do these tasks successful, the person assuming the role as
Materials Manager must have the skills necessary to oversee or actively
co-operate with:

* Procurement Managers

* Transportation Directors

* Strategic Sourcing Consultants

* Production Managers

* Vendor Partners

Procurement
and inventory management staff on the materials team must be quick to
embrace new methods for supply chain optimization. Whether they are
dealing with production materials management or hospital materials management, understanding the needs of internal and external customers is key to success.

They
must understand the metrics for measuring internal inventory efficiency
such as inventory turnover rate, and make sure that procurement system
tools, inventory management systems, and the retail inventory systems
all tie in together to maximize material visibility throughout the
supply chain.

Automation and real time integration
of demand data from ERP or retail inventory management systems is
critical to making good material management decisions. No matter how
good your staff is, without the right data at the right time, any gains
from selecting the best strategic sourcing methodology is lost in
execution.